2 min readIt’s been a year since new SEC rules restructured institutional prime money market funds by requiring that they float net asset values (NAVs) and impose redemption restrictions in times of fiscal stress. When the changes hit, a generation of cash managers who had always turned to prime funds as a matter of course suddenly were…
2 min readAbstract In the year since the SEC instituted new rules governing money market mutual funds, institutional prime funds have recaptured some lost ground, although balances still lag government funds. Fund characteristics returned to pre-reform levels with wide dispersions and concentrated exposures to non-US financial issuers. Asset-backed instruments also increased. While prime fund yields benefitted from…
2 min readWhen Republican leaders unveiled their long-awaited tax-reform proposal late last month, politicians and pundits jumped on the nine-page document to determine potential winners and losers. The “long-on-promises, short-on-details” nature of the so-called “Trump tax plan” raised more questions than it answered, rendering many predictions little more than conjectures and educated guesses. Even so, there were…
5 min readAbstract The Republican bill represents a starting point for tax and budget negotiations. While details are lacking, the current plan offers some interesting angles for market participants to think about their liquidity investment strategies. We highlighted parts of the bill relevant to corporate cash investors and their potential impact on issuers and investors in the…
1 min readBanks have traditionally been a little slow to follow interest rate hikes by the Fed with comparable rate increases on their own deposit accounts. But this time around they seem to be moving more slowly than ever. Our August research report―Higher Deposit Rates-Where Art Thou?―looks back at the past two Fed tightening cycles and compares…
3 min readAbstract The return of yield opportunities presents institutional cash investors with fresh challenges. Higher rates have driven up the cost of staying with ultra conservative instruments. Money market fund reforms have left corporate cash managers with few clear choices to add yield. And historically popular cash vehicles that have undergone significant changes demand a fresh…
1 min readSurvey Objective To shed light on treasury departments’ efforts to mitigate liquidity risk in short-term cash investment, debt and forecasting practices and changes over time. Key Survey Takeaways Corporate Investment Policies are a Low Priority 41% have not made any changes to their corporate investment policy in the past 2 years. Only 23% have updated their…
1 min readIt may be time for a refresher course on the pros and cons of bank deposits as the primary repository of corporate cash. In the wake of last fall’s transition to floating net asset values (NAVs) at institutional prime money market funds, treasurers were already going through a once-in-a-generation rethink of liquidity and risk. Now,…
3 min readAbstract Treasury organizations maintain deposit relationships despite uninsured credit risk and lost yield opportunity. Earnings credit rates may become less competitive than market-based rates. Including separate accounts in the mix helps address both credit and yield objectives in institutional liquidity management. Introduction The search for liquidity management solutions reached a new level of significance when…
5 min readPerhaps no word better describes the start of 2017 than “transition.” The year began with the White House’s transition from the Obama to the Trump administration, continued with the rise of European populism, and recently culminated in the official beginning of Britain’s transition out of the European Union. Somewhat less noticeably, change is also taking…